IRS Announces Changes for 2025 Filing Season

Last year the IRS announced the creation of a task force to combat scams aimed at defrauding taxpayers. See: https://magdaabdogomezlaw.com/irss-efforts-to-combat-tax-scams/ Two weeks ago the IRS and the task force announced changes for the 2025 tax filing season. The goal of the changes is to help protect taxpayers from becoming victims of tax scams, and to protect tax professionals from having their credentials compromised.?

??????????? One of the changes this filing season involves the fuel tax credit. See: https://magdaabdogomezlaw.com/irs-issues-taxpayer-alert-regarding-tax-scams/ Despite the fact that most taxpayers do not qualify for the credit, scammers lured taxpayers into claiming the credit through the use of social media campaigns. The IRS has created the “Statement Supporting Fuel Tax Credit (FTC) Computation – 1”. This new form is designed to make it harder for taxpayers to be misled into claiming the tax fuel credit by educating the taxpayer on eligibility requirements for claiming the credit. The form must be filed by anyone claiming the credit on the return. Taxpayers who claim credits based on frivolous positions or based on a desire to delay or impede tax administration are subject to a $5,000 penalty for each return claiming the credit. If the return making the frivolous claim is filed jointly, then each spouse is subject to the $5,000 penalty.?

??????????? A second change being implemented targets the “Other Withholding” claims provided for in Line 25C of the income tax return (Form 1040). The most common instances to which the “other withholding” claim applies are: Foreign Person’s US Source Income Subjec to Withholding; Foreign Partner’s Information Statement of §1446 Withholding, Statement of Withholding on Dispositions by Foreign Persons of US Real Property Interests, Certain Gambling Winnings, Additional Medicare Tax and Partner’s Share of Income, Deductions and Credits. In other words, the basis for the “other withholding” claim arises from very specific situations not applicable to the average taxpayer.?

??????????? Taxpayers have been scammed into claiming “other withholding” on their tax returns and the IRS has noticed. As a result, the IRS will be increasing its review of returns claiming “other withholding”. To protect taxpayers from the increased scrutiny on returns claiming “other withholding” and reduce delays in processing those returns”, the IRS has recommended that taxpayers who claim “other withholding” on the return attach to the return documentation supporting the claim.?

??????????? Ghost preparers are preparers who never sign the returns. They cause a great deal of harm taxpayers. See: https://magdaabdogomezlaw.com/choosing-a-reputable-tax-preparer/ I see the results of the work of ghost preparers. The taxpayers are very happy to get a large tax refund, but not so happy when they find they are liable to the IRS for thousands of dollars of taxes, interest and penalties because of fraudulent deductions claimed on the return by the preparer. The preparer is, of course, nowhere to be found. The IRS has addressed the issue of ghost preparers many times in the past. This filing season the IRS will take taxpayer education regarding ghost tax preparers one step further.?

??????????? This filing season the IRS will send a letter to taxpayers whose returns appear to have been prepared by a preparer who did not sign or include the preparer tax identification number on the return (PTIN). The purpose of the letter is to educate taxpayers about ghost preparers and to help the IRS identify preparers who are being paid to prepare a return, but are not signing the return or providing the PTIN on the return.?

??????????? Lastly, this tax season the IRS will be working to add more protections for tax professionals. Details are not yet available, but the goal is to protect tax professionals’ electronic filing identification number (EFIN) and PTIN from unauthorized use.?

??????????? The IRS anticipates that social media and “influencers” will be out in full force spreading misinformation and promoting tax scams this filing season. Perhaps social media is not the best place from which to get tax advice. Speak to reputable tax professionals, or visit the IRS website for reliable tax information. Stay informed about tax scams and be vigilant. Educate family, friends and clients about potential tax scams. See: https://www.irs.gov/help/tax-scams As always remember, if it sounds too good to be true, it is probably not true.

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